Lebanon's Good Samaritan Health System cuts 50 jobs

The heart of the Good Samaritan Health System is the hospital at Fourth and Walnut streets in Lebanon. (Lebanon Daily News File Photo)

Good Samaritan Health System laid off 22 employees Wednesday in a move to "adapt to current market conditions," hospital officials announced in a news release Wednesday afternoon. Officials said an additional 28 vacant positions will not be filled. Hospital officials notified employees of the layoffs Wednesday afternoon. The layoffs were effective Wednesday.

The majority of the 22 positions are in administrative and support areas, according to the release. Some clinical positions are among those being cut, according to William Mulligan, vice president for strategic planning and marketing for Good Samaritan Health System.

Good Samaritan officials said affected employees will receive severance packages and outplacement assistance.

The announcement comes two months after the hospital's long-term credit rating on its series 2002 and 2004 revenue bonds was lowered from BB+ to B+ by Standard & Poor's. Mulligan said the downgrade did not prompt the layoffs.

"There are many factors contributing to this decision to reorganize," said Robert J. Longo,
president and chief executive officer for the Good Samaritan Health System. "We are in a
transformational period in health care. We have an obligation to protect the community's access
to health-care services through the transition."

Officials said the changes are not expected to have an impact on patient care, but they will allow the hospital to bring its operating expenses in line with net patient revenues.

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For the last fiscal year, the net hospital revenue was $171,917,000.

The gap between revenues and operating expenses was cited by S&P in the bond-rating reduction.

"These changes are painful for everyone involved," Longo said. "We know that we must
carefully manage our resources to ensure that Good Samaritan will be able to continue fulfilling
its mission to provide the services needed to improve the overall health of our community."

Longo said the health-care field "is experiencing a period of great transformation." Like many other hospitals and health systems across the country, Good Samaritan continues to experience changing patient utilization patterns and significant pressures on reimbursement from Medicare, Medicaid and other third-party payers, the release stated. Many patients who may have been admitted for hospital care in the past are now categorized as "observation status" as they no longer meet more stringent criteria for inpatient care. These changes have reduced reimbursements to the hospital by millions of dollars, according to the release.

Good Samaritan receives approximately 75 percent of its revenue through government Medicare and Medicaid programs, the release stated. As a result, it is affected by cost-containment measures associated with the Affordable Care Act - commonly known as Obamacare - as well as mandatory spending for expensive information technology improvements necessary for electronic medical records and other purposes. In addition, the federal budget sequestration will reduce reimbursements to Good Samaritan by approximately $2.5 million in the next fiscal year.

Good Samaritan also has incurred approximately $20 million in charitable and uncompensated care in its last fiscal year. These expenses have been increasing in recent years and are expected to continue to grow in the future.

The health system has also implemented a variety of other cost-containment efforts to reduce expenses.

"We are streamlining some of our purchasing processes to make sure that we're taking advantages of bulk discounts," Mulligan said. "We've eliminated some travel and conferences and other expenses along those lines. We looked at budgets and found some little cost savings that together add up."

A hospital official estimated the changes represent a less-than 2-percent reduction in the labor force. Even with the latest layoffs, Good Samaritan remains Lebanon County's largest non-government employer with more than 1,400 employees. Mulligan said the 28 vacant positions is not a high number, given the total number of workers employed at the hospital.

"Those are the ones we determined that we were not going to fill," he said. Because we have over 1,400 employees, there are always positions open. There are still 50 positions open for which we will be hiring."

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